Field
Embodiments provided herein generally relate to systems and methods for providing insurer risk data, and particularly to providing information associated with determining risks that an insurer has taken that are to be compensated through a predetermined program.
Technical Background
Beginning in 2014 under the Affordable Care Act (ACA), the health insurance industry shifted from the traditional underwritten insurance model to one that is community-rated and guaranteed issue. This means that all enrollees must be accepted and pricing may not vary based on health status. Under the ACA model, various government programs were implemented. As an example, a risk adjustment program was implemented that transfers payments and charges between health insurance carriers within a risk pool based on the relative riskiness of a population. This program was intended to dampen the effects of adverse selection in the community-rated, guaranteed issue markets. As an example, because insurers were no longer allowed to deny coverage or charge increased rates for many preexisting conditions, the risk adjustment program reimburses those insurers who accept individuals (or groups) that are deemed to be “riskier.” The reimbursements are derived from the insurers who do not take the “riskier” individuals or groups, so that insurers who do not accept riskier clients will not receive a windfall.
Additionally, another program that was implemented was a reinsurance program. The reinsurance program was a three-year transitional program in which the federal government covers a part of the claims expense for high cost members within the individual market. By the government compensating insurers for high cost/risk members, the down-side risks for insurers and the incentive for overly conservative pricing are both reduced under the ACA.
While these new programs provide options for insurers to accept riskier members, many of these insurers do not know the cost-benefit for accepting various members. Additionally, current solutions are not able to provide an accounting of costs, income, and/or other financial data that would allow for an efficient operation under the ACA.